And the Walls Came Tumbling Down—Australian Courts Rule against Glencore in Tax Litigation

collapsing wallThe Paradise Papers strike again. One of the world’s largest companies lost a court battle over the release of tax secrets exposed in the Paradise Papers document leak.


Glencore is a multinational mining company and ranks in the top ten of the biggest companies in the world. It also operates in commodities, like grain and cotton operations, in Australia.  


We have discussed the Paradise Papers leak several times. You may recall the Paradise Papers are a trove of over 13 million records leaked to two reporters from the German newspaper Süddeutsche Zeitung. The documents, from the offshore tax specialty law firm Appleby, created a wave a scandal as the secrets of the rich and famous were exposed in the broadsheets.


The records revealed the efforts and strategies used by high wealth individuals and companies to avoid taxation, often by funneling assets through opaque secrecy jurisdictions around the globe. In all fairness, Appleby has always maintained the “leak” was a cyber attack and considers it a crime.


Glencore was one of the companies caught up in the Paradise Papers leak.  The Australia Tax Office (ATO) has pursued the tax practices of other enterprise for sketchy back office tax practices. In 2018, another commodities and mining corporation, BHP, settled with ATO for $529 million. Multinational mining giant Rio Tinto, also a large mining interest, continues to fight the almost $500 million bill for back taxes leveled on the company by the ATO.


Given what came before, it is easy to see why Glencore fought to keep its tax secrets under the table. According to the International Consortium of Investigative Journalists (ICIJ), the non-profit group investigating the Paradise Papers, the documents “showed that Glencore planned to move tens of billions of dollars “out of the Australian tax net through an offshore web.”  Like Rio Tinto and BHP, Glencore is accused of participating in “cross-currency interest rate swaps” involving as much as $25 billion.  While the swaps are a legal tool, they are coming under increasing scrutiny as a vehicle for moving money into low-tax jurisdictions, and skirting legitimate taxing entities.


The story is by no means over. While the company is quoted in a statement as respecting the decision of the Australian High Court, a battle over billions in potential tax revenue is just warming up.


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